What is the difference between EAR and Gross Rate?

You will find that banks and building societies often quote two different interest rates. The Annual Effective Rate (AER) is a benchmark for comparing the different savings products. It reflects the interest compounded over a year. The gross interest is the flat rate actually paid. If interest is paid annually then the gross rate and the AER should be the same since there is no compounding. When interest is paid monthly the gross rate is around 0.1 per cent less than the EAR. That is because the latter takes into account the interest earned on each month’s interest.
Bonus interest rates also impact the difference between EAR and gross rates. If a bonus is paid for six months, the EAR would be less, since it includes the months without bonus. If you want to switch accounts after the bonus has ended, use the gross rate as a benchmark. Don’t forget to check whether it is quoted monthly or annual.